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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1996
------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________________ to_____________________
Commission file number 0-15698
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WINDSOR PARK PROPERTIES 2, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
California 33-0054332
- --------------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
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(Address of principal executive offices)
(619) 746-2411
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes (x) No ( )
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1
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TABLE OF CONTENTS
PART I
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Page
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Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II
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Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE
</TABLE>
2
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENT OF NET ASSETS IN LIQUIDATION
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Liquidation Basis
-----------------
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June 30, 1996
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Assets
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Cash and cash equivalents $ 243,000
Other assets 14,900
----------------
257,900
Liabilities
- -----------
Accounts payable and accrued expenses 57,900
----------------
Net Assets In Liquidation $ 200,000
================
Comprised of:
Partners' equity:
Limited partners $ 198,000
General partners 2,000
----------------
$ 200,000
================
</TABLE>
See accompanying notes to financial statements.
3
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
Going Concern Basis
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<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------
1996 1995
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<S> <C> <C>
REVENUES
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Rent and utilities $ 60,300 $ 120,800
Interest 4,100 6,900
Other 3,600
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64,400 131,300
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COSTS AND EXPENSES
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Property operating 67,500 110,400
Depreciation and amortization 16,700
General and administrative:
Related parties 7,500 8,000
Other 11,000 11,800
Provision for estimated costs of liquidation 37,300
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123,300 146,900
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Operating loss (58,900) (15,600)
Gain on sale of property held for sale 109,100
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Net income (loss) $ 50,200 $ (15,600)
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Net income (loss) - general partners $ 500 $ (100)
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Net income (loss) - limited partners $ 49,700 $ (15,500)
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Net income (loss) per limited partnership unit $ 0.33 $ (0.10)
============= =============
</TABLE>
See accompanying notes to financial statements.
4
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
Going Concern Basis
-------------------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
1996 1995
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<S> <C> <C>
REVENUES
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Rent and utilities $ 182,900 $ 238,000
Interest 8,700 15,300
Other 13,100 6,300
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204,700 259,600
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COSTS AND EXPENSES
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Property operating 174,400 208,900
Depreciation and amortization 4,900 33,700
General and administrative:
Related parties 15,400 16,800
Other 21,100 21,800
Provision for estimated costs of liquidation 37,300
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253,100 281,200
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Operating loss (48,400) (21,600)
Gain on sale of property held for sale 109,100
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Net income (loss) $ 60,700 $ (21,600)
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Net income (loss) - general partners $ 600 $ (200)
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Net income (loss) - limited partners $ 60,100 $ (21,400)
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Net income (loss) per limited partnership unit $ 0.40 $ (0.14)
============= =============
</TABLE>
See accompanying notes to financial statements.
5
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
------------------------------
FOR THE PERIOD ENDED JUNE 30, 1996
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Going Concern Basis
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<TABLE>
<CAPTION>
General Partners Limited Partners Total
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<S> <C> <C> <C>
Balance at January 1, 1995 $ (411,400) $ 2,023,800 $ 1,612,400
Cash distributions (3,000) (300,000) (303,000)
Net loss (1,600) (155,600) (157,200)
Repurchase of limited partnership
units (2,200) (2,200)
--------------------- --------------------- ---------------------
Balance at December 31, 1995 (416,000) 1,566,000 1,150,000
Cash distributions (10,100) (1,000,000) (1,010,100)
Net income 600 60,100 60,700
Repurchase of limited partnership
units (600) (600)
Reallocation of partners' equity 427,500 (427,500)
--------------------- --------------------- ---------------------
Balance at June 30, 1996 $ 2,000 $ 198,000 $ 200,000
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</TABLE>
See accompanying notes to financial statements.
6
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WINDSOR PARK PROPERTIES 2
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(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
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Going Concern Basis
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Six Months Ended June 30,
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1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 60,700 $ (21,600)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization 4,900 33,700
Gain on sale of property held for sale and other assets (107,900) (1,400)
Changes in operating assets and liabilities:
Other assets 12,800 16,000
Accounts payable and accrued expenses (5,900) 28,000
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Net cash (used in) provided by operating activities (35,400) 54,700
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Cash flows from investing activities:
Proceeds from sale of property held for sale and other
assets 891,300 3,000
Increase in property held for investment (14,000) (9,800)
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Net cash provided by (used in) investing activities 877,300 (6,800)
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Cash flows from financing activities:
Cash distributions (1,010,100) (202,000)
Repurchase of limited partnership units (600) (400)
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Net cash used in financing activities (1,010,700) (202,400)
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Net decrease in cash and cash equivalents (168,800) (154,500)
Cash and cash equivalents at beginning of period 411,800 717,800
--------------- --------------
Cash and cash equivalents at end of period $ 243,000 $ 563,300
=============== ==============
</TABLE>
See accompanying notes to financial statements.
7
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. PLAN OF LIQUIDATION AND DISSOLUTION AND BASIS OF ACCOUNTING
-----------------------------------------------------------
In June 1996 the Partnership sold its last investment property. At that time,
the General Partners determined that it was in the best interests of the limited
partners to liquidate the Partnership. It is currently expected that before
December 1996 all liabilities of the Partnership will be paid, the remaining
cash distributed to the partners, and the Partnership dissolved.
As a result of the plan to liquidate and dissolve the Partnership, the
Partnership changed its basis of accounting from the going concern basis to the
liquidation basis effective June 30, 1996. Accordingly, assets are stated at
estimated net realizable value, and liabilities include estimated expenses of
liquidation.
NOTE 2. SALES OF INVESTMENT PROPERTIES
------------------------------
In May 1996, the Partnership sold the Pinecrest manufactured home community
located in Shreveport, Louisiana. The Partnership received proceeds of
$791,200, net of sale and closing costs of $8,800. The Partnership realized a
gain on the sale of $116,500. The community was sold to ROC Communities, Inc.,
a Maryland corporation (ROC). ROC has provided day-to-day property management
services at the community since 1991 and has previously acquired properties from
the Partnership and its affiliates. In addition, the corporate general partner
owns a nominal equity position in ROC.
In June 1996, the Partnership sold the Edgewood manufactured home community
located in Oklahoma City, Oklahoma. The Partnership received proceeds of
$99,300, net of sale and closing costs of $10,700. The Partnership realized a
loss on the sale of $7,400.
NOTE 3. NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
----------------------------------------------
Net income (loss) per limited partnership unit is calculated based on the
weighted average number of limited partnership units outstanding during the
period and the net income (loss) allocated to the Limited Partners. The
weighted average number of limited partnership units outstanding during the
three and six months ended June 30, 1996 was 149,691 and 149,735, respectively;
and 150,295 and 150,320 for the three and six months ending June 30, 1995,
respectively.
NOTE 4. RELATED PARTY TRANSACTIONS
--------------------------
The General Partners of the Partnership are The Windsor Corporation, a
California corporation, and John A. Coseo, Jr. (Mr. Coseo is also the
president, chief executive officer and the principal stockholder of The Windsor
Corporation).
The General Partners are entitled to receive various fees and compensation from
the Partnership which are summarized as follows:
Operational Stage
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The net profits and losses of the Partnership during the operational stage are
allocated 99% to the Limited Partners and 1% to the General Partners. Cash
distributions from operations are allocated 95% to the Limited Partners and 5%
to the General Partners.
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The Partnership reimburses The Windsor Corporation for certain direct expenses,
and employee, executive and administrative time, which are incurred on the
Partnership's behalf. The Partnership was charged $9,400 and $9,900 for such
costs during the three months ended June 30, 1996 and 1995, respectively; and
$19,100 and $20,500 during the six months ended June 30, 1996 and 1995,
respectively. These costs are included in property operating and general and
administrative expenses in the accompanying Statements of Operations.
Liquidation Stage
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During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of investment properties is limited to competitive real
estate commissions, not to exceed 6% of the contract price for the sale of the
property. The General Partners may receive up to one-half of the competitive
real estate commission, not to exceed 3%, if they provide a substantial amount
of services in the sales effort. The General Partners' commission is
subordinated to the Limited Partners receiving a 9% cumulative, non-compounded,
annual return on their original capital investments. No commissions were paid
to the General Partners during the three and six months ended June 30, 1996 and
1995.
The General Partners also receive 1% of net income and cash distributions from
the sale of Partnership properties.
During the three months ended June 30, 1996 and 1995 the General Partners
received cash distributions of $10,100 and $1,000, respectively; and $10,100 and
$2,000 for the six months ended June 30, 1996 and 1995, respectively.
The limited partnership agreement does not require the General Partners to
restore a deficit balance in their book capital account. Accordingly, a
reallocation of the partners' equity was made as of June 30, 1996 to reflect the
final amounts distributable to the partners.
9
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WINDSOR PARK PROPERTIES 2
-------------------------
(A California Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
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June 30, 1996 as compared to December 31, 1995
- ----------------------------------------------
The Partnership's primary source of cash during the six months ended June 30,
1996 was proceeds from the sale of investment properties. The primary use of
cash during the same period was for cash distributions to partners.
In May 1996, the Partnership sold the Pinecrest manufactured home community in
Shreveport, Louisiana. The Partnership received proceeds of $791,200, net of
sale and closing costs of $8,800. Also in May 1996, the Partnership made a
$1,000,000 distribution to the limited partners consisting of sales proceeds and
cash reserves.
In June 1996, the Partnership sold the Edgewood manufactured home community
located in Oklahoma City, Oklahoma. The Partnership received proceeds of
$99,300, net of sale and closing costs of $10,700.
In the opinion of the General Partners, both property sales were in the best
interests of the limited partners given the length of their holding periods and
the fact that there were no indications of any sustained strengthening in the
local economies.
In June 1996, subsequent to the final investment property sale, the General
Partners decided to liquidate the Partnership. It is currently expected that
before December 1996 all liabilities of the Partnership will be paid, the
remaining cash distributed to the partners, and the Partnership dissolved.
The future source of cash for the Partnership will be provided from cash
reserves. The future uses of cash will be for Partnership administration and
distributions to partners. The General Partners believe that the future sources
of cash are sufficient to meet the working capital requirements of the
Partnership until it is liquidated.
Results of Operations
- ---------------------
Six months ended June 30, 1996 as compared to the six months ended June 30, 1995
- --------------------------------------------------------------------------------
The results of operations for the six months ended June 30, 1996 and 1995 are
not directly comparable due to the sales of the Pinecrest and Edgewood
manufactured home communities in May 1996 and June 1996, respectively. The
Partnership realized net income of $60,700 ($0.40 per limited partnership unit)
for the six months ended June 30, 1996 and incurred a net loss of $21,600 ($0.14
per limited partnership unit) for the six months ended June 30, 1995.
As a result of the property sales discussed previously, all major revenue and
expense categories decreased in 1996, specifically, rent and utilities revenues,
property operating costs and depreciation and amortization.
Interest income decreased from $15,300 in 1995 to $8,700 in 1996 due mainly to
lower cash balances maintained by the Partnership.
10
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The Partnership realized a gain on sale of investment property of $109,100 in
1996, consisting of a $116,500 gain realized from the sale of the Pinecrest
community, offset by a $7,400 loss incurred on the sale of the Edgewood
community.
The provision for estimated costs of liquidation of $37,300 in 1996 was recorded
in connection with the June 1996 change in basis of accounting from the going
concern basis to the liquidation basis. The provision represents liquidation
costs expected to be incurred by the Partnership prior to its dissolution.
Three months ended June 30, 1996 as compared to three months ended June 30, 1995
- --------------------------------------------------------------------------------
The results of operations for the three months ended June 30, 1996 and 1995 are
not directly comparable due to the sales of the Pinecrest and Edgewood
manufactured home communities in May 1996 and June 1996, respectively. The
Partnership realized net income of $50,200 ($0.33 per limited partnership unit)
for the three months ended June 30, 1996 and incurred a net loss of $15,600
($0.10 per limited partnership unit) for the three months ended June 30, 1995.
As a result of the property sales discussed previously, all major revenue and
expense categories decreased in 1996, specifically, rent and utilities revenues,
property operating costs and depreciation and amortization.
Interest income decreased from $6,900 in 1995 to $4,100 in 1996 due mainly to
lower cash balances maintained by the Partnership.
The Partnership realized a gain on sale of investment property of $109,100 in
1996, consisting of a $116,500 gain realized from the sale of the Pinecrest
community, offset by a $7,400 loss incurred on the sale of the Edgewood
community.
The provision for estimated costs of liquidation of $37,300 in 1996 was recorded
in connection with the June 1996 change in basis of account from the going
concern basis to the liquidation basis. The provision represents liquidation
costs expected to be incurred by the Partnership prior to its dissolution.
11
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PART II
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K
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<C> <S>
(a) Exhibits and Index of Exhibits
None
(b) Reports on Form 8-K
1) A Form 8-K (dated May 7, 1996) was filed with regards to the
Partnership's disposition of the Pinecrest manufactured home community
located in Shreveport, Louisiana. The items reported in this current
report were Item 2 (acquisition or disposition of assets) and Item 7
(financial statements, proforma financial information and exhibits).
A summary of the financial information included in the report follows:
Windsor Park Properties 2
-------------------------
a) Proforma Balance Sheet at December 31, 1995
b) Proforma Statement of Operations for the year ended December 31,
1995
2)
A Form 8-K (dated June 3, 1996) was filed with regards to the
Partnership's disposition of the Edgewood manufactured home community
located in Oklahoma City, Oklahoma. The items reported in this current
report were Item 2 (acquisition or disposition of assets) and Item 7
(financial statements, proforma financial information and exhibits).
A summary of the financial information included in the report follows:
Windsor Park Properties 2
--------------------------
a) Proforma Balance Sheet at December 31, 1995
b) Proforma Statement of Operations for the year ended
December 31, 1995
c) Proforma Statement of Operations for the three months
ended March 31, 1996
</TABLE>
12
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR PARK PROPERTIES 2,
A California Limited Partnership
---------------------------------
(Registrant)
By: The Windsor Corporation, General Partner
By /s/JOHN A. COSEO, JR.
--------------------------------------------------
JOHN A. COSEO, JR.
Chief Financial Officer
(Principal Accounting Officer)
Date: August 12, 1996
13
